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Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

Thematic (Sector/Industry)

<h2>KEY HIGHLIGHTS</h2>
<ul>
<li>WTR-CMI last week.&nbsp;In what was a down week for the market overall, our WTR-CMI index of 30 chemicals and materials technology stocks declined 1.8%, which still beat both the S&amp;P 500’s (2.8%) and Russell 2000’s (3.2%) returns for the week.</li>
<li>Winners and losers. Stronger than expected 1Q22 results drove AVNT (up 10.8%), and PPG (up 3.6%) last week, with AVNT also benefiting from the&nbsp;announced acquisition&nbsp;of DSM’s Protective Materials business, which would expand the company’s position in the advanced composites industry. At the other end of the spectrum, the ever-volatile lithium names came under pressure, possibly on news that Chinese lithium carbonate production exceeded expectations, with LTHM losing 10.7%, LAC pulling back 9.3%, and PLL and ALB seeing their stock prices decline 5.3% and 4.9% respectively.</li>
<li>Construction market losing steam in US.&nbsp;Construction and Transportation markets represent 40-50% of a typical chemicals and materials company’s sales, so the performance of these industries is a key barometer of performance for the companies in their respective supply chains. With the global automotive industry struggling with semiconductor shortages, COVID lockdowns, and logistical issues, the strength of the construction market helped shore up volumes for many companies in our sector in 2021. However, recent&nbsp;weakness in this market, driven by cost inflation and now, higher mortgage rates, may spell trouble for companies with exposure to the sector, including SHW, PPG, FUL and RPM. Furthermore, with&nbsp;homebuilders’ sentiment declining, construction market woes may be just beginning.</li>
<li>Organic production drives bio-based ag-chem growth.&nbsp;Organic fresh produce sales grew 4% Y/Y&nbsp;in 1Q22, and while growth was driven by higher prices, as volumes declined 1%, they still outperformed conventional produce sales, which saw volume drop of 2.7% Y/Y. Continued adoption of organic farming is one of many reasons bio-ag companies like MBII and BIOX are seeing strong growth, while&nbsp;established ag-chem companies jockey for position&nbsp;in this evolving industry. With fertilizer prices and availability becoming in issue (see below),&nbsp;biostimulants market segment&nbsp;may see even stronger adoption rates.</li>
</ul>
<h2>WTR-CMI WEEKLY PERFORMANCE</h2>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/270/791/original/image_73769124821651103162837.png?1651103165" class="editor-image img-responsive" data-smartkarma-image-id="270791"></figure>
<p>Source: YCharts, April 22 close</p>
<h2>Automotive &amp; Transportation</h2>
<p>Bad start to the year in Europe. 1Q22&nbsp;ACEA statistics&nbsp;on new auto registrations in Europe were released, showing a 20.5% Y/Y drop in March (ninth consecutive month of Y/Y declines), which brought 1Q22 registrations down 12.3% Y/Y. With 1Q22 containing only one month (March) of tough Y/Y comps and 2Q22 coming against the last two strong months of 2021, April and May, this quarter’s performance may not show much if any improvement compared to 1Q22 results. Companies with significant exposure to the European automotive market, such as AXTA and BASF (and to a lesser degree, PPG) may therefore continue to struggle with volumes, even as they raise prices in order to catch up with inflationary raw material costs. Results therefore appear more likely to disappoint, at least until we get into easier Y/Y comps in 2H22.</p>
<p>COVID lockdown impact yet to be worked out, while European war adds further concerns. While the Chinese government appears to be relaxing the lockdowns in Shanghai, the&nbsp;restart of production in the region&nbsp;is going far from smoothly. In the meantime, the lockdowns and shuttered production impacted the already tight semiconductor market, with&nbsp;Chinese chip output down 4.2%&nbsp;Y/Y, the first time Y/Y production slipped since 1Q19. With chip shortages continuing to be an issue holding back auto production globally,&nbsp;Honda joined the list of companies cutting back on auto builds&nbsp;at its factories in Japan, citing COVID lockdowns and chip shortages as the reason. And as if that wasn’t enough of a headwind for the industry,&nbsp;Continental, one of the major global tire producers, recently lowered its earnings outlook&nbsp;for the year, citing higher material costs due to the war in Ukraine, as well as related supply chain disruptions.</p>
<h2>Lithium &amp; EV Ecosystem Developments</h2>
<p>Supply chain tie-ups continue. Companies throughout the EV supply chain look to both secure critical metals and materials for batteries and electric motors powering the EV transition, and to reduce if not eliminate the near total dependence on China for these strategic materials. China, for example, supplies near 100% of rare earths, used in magnets driving electric motors. One global electric motor producer, Schaeffler,&nbsp;recently announced a deal&nbsp;to source rare earths for its magnets from Norway, reducing its dependence on China, at least after 2024. Graphite, another critical material for EV batteries, is also expected to see strong growth going forward, with auto companies seeking to secure their supply of the material with off-take agreements with producers. Recently, a US unit of Australian company Syrah Resources Ltd.&nbsp;announced the receipt of $107M in a conditional loan&nbsp;from the Biden Administration to expand its facility in Louisiana and provide a domestic source of graphite for Tesla’s operations.</p>
<p>Efforts to domesticate EV supply chain. Again, both in an effort to shorten and simplify the supply chain, but also to reduce reliance on China, manufacturers and governments are working to develop local ecosystems for EV production. Thus,&nbsp;South Korean battery companies are looking to develop and expand nickel production in Indonesia, signing an agreement with Indonesian state-owned companies for a project worth around $9 billion over time. Closer to home, the founder of Britishvolt and Italvolt has announced the creation of another subsidiary, this time in the US, named Statevolt, for the purpose of&nbsp;building a lithium battery factory in U.S., most likely in Southern California’s Imperial Valley, which will offer an annual capacity of 54 GWh when fully expanded.</p>
<p>Impact of chip shortages spreading to EVs. While the semiconductor shortage has plagued the auto industry for well over a year, the EV industry seemed largely immune. That may be changing, as EV production halts have begun to occur more often, usually blamed on chip shortages, but now also on supply disruptions related to the war in Ukraine.&nbsp;Renault had to pause production&nbsp;of its all-electric Mégane E-Tech Electric brand in France for over 10 days recently. With chip shortages expected to last into 2024, their impact on EV production may expand which, combined with higher material and battery costs (and resulting higher vehicle costs), may temper the pace of growth of EVs globally.</p>
<h2>Ag-Chem and Ag-Tech</h2>
<p>Real world implications from the war in Ukraine. As expected, Russia’s invasion of Ukraine is having a catastrophic impact on the country’s ag sector. Government officials already warned that this year’s plantings may be down as much as 50%, perhaps more, as the result of the conflict. The latest&nbsp;planting updates&nbsp;from the region do not provide cause for optimism. And despite the heroism of the farmers that are getting out into the fields despite shelling, land mines, and&nbsp;shortages of everything from fuel to fertilizers, this year’s production may barely suffice for internal use, with longer term impact likely to be felt for years to come. Aside from the planting and production shortfall in Ukraine, the impact of sanctions and counter sanctions continue to be evaluated from the global perspective. And while American farmers may be&nbsp;less impacted by potential shortages of fertilizers, given that our needs are met largely by domestic or Canadian production, in Brazil, which imports 75-95% of its fertilizer needs, much of it from Russia and Belarus, price and availability may become a real issue for the region’s ag industry.</p>
<p>Availability of ag inputs. Given the importance of Brazil in the global market as a producer and exporter of row crops, acreage or yield declines due to unavailability of crop inputs can have devastating effects on global food security. On a positive note, a&nbsp;<a href="https://www.thedailyscoop.com/news/retail-industry/russian-fertilizer-shipments-continue-brazil?mkt_tok=ODQzLVlHQi03OTMAAAGD5dKOWK90TEnesgpbtZe3iLXpaEggk9J1LM6TmfkjaeW3Qy8y6HyZwt-WyOqH6hPxO3iOo8z3xhMlCub_jFOlpylGdDRUpD3Ac_euHYreRSD1-qcTAQ" target="_blank" rel="noopener">recent report by </a>Reuters&nbsp;mentioned that least 24 vessels carrying almost 678,000 MT of Russian fertilizers will reach Brazil in the following weeks. However, with 11 of the 24 vessels leaving port after the February 24 start of hostilities, the flow of fertilizer from Russia into the country may slow, even as demand ramps up, leaving plenty of uncertainty in the market as to the ultimate production quantities that would be available for export. Speaking of Brazil, the&nbsp;country’s wheat industry saw a strong uptick in herbicide use in 2021, driven in part by growth in planted acres, but also by growing adoption of pre-harvest desiccation. Wheat being an important end-market for BIOX’s sales and a growth opportunity for MBII as it partners with BIOX to expedite its penetration of the LATAM market, we see this is a positive for the combined company, as well as for ag-chem majors like CTVA, BASF and Bayer.</p>
<p>As if the war and cost inflation wasn’t enough. While one would expect the conflict in Europe to disrupt production and shipping of fertilizers, Union Pacific’s limitations on fertilizer shipments in domestic markets is adding insult to injury.&nbsp;CF Industries’ notice of UP reducing shipments&nbsp;of its nitrogen and hydrogen products by 20% may impact the company’s ability to meet new or incremental demand, adding to availability concerns many farmers already face, not to mention likely contributing to higher fertilizer prices if alternative shipping arrangements are required. The one remaining silver lining is the&nbsp;continuing upward trend in grain prices, which suggest US farmers may still deliver strong results, even with higher costs of everything from fertilizers to crop protection chemicals, to fuel, to labor, to land.</p>
<h2>Rating and Price Target Changes</h2>
<p>ALB&nbsp;– RBC raised its price target (PT) to $276 from $275 and reiterated its Outperform rating.</p>
<p>ASH&nbsp;– Wells Fargo raised its PT to $113 from $105 while maintaining its Equal Weight recommendation; Mizuho also raised its PT to $136 from $129, reiterating its Buy rating.</p>
<p>AVNT&nbsp;– Wells Fargo raised its PT to $65 from $60 and reiterated its Overweight rating; Oppenheimer also raised its PT to $69 from $68 and reiterated its Outperform rating.</p>
<p>AXTA&nbsp;– Deutsche Bank downgraded the stock to Hold from Buy and lowered PT to $27 from $34; Wells Fargo reduced its PT to $27 from $32 and maintained its Equal Weight rating.</p>
<p>CMP&nbsp;– BMO raised its PT to $63 from $60 and maintained its Market Perform rating.</p>
<p>CTVA&nbsp;– RBC raised its PT to $67 from $57 and reiterated its Outperform rating.</p>
<p>EAF&nbsp;– RBC lowered its PT to $112 from $113 but reiterated its Outperform rating.</p>
<p>EMN&nbsp;– BofA downgraded the stock to Neutral from Buy and lowered its PT to $124 from $150; Wolfe Research downgraded the stock to Peer Perform from Outperform and lowered its PT to $114 from $130.</p>
<p>FMC&nbsp;– RBC raised its PT to $152 from $135 and reiterated its Outperform rating.</p>
<p>PPG&nbsp;– Wells Fargo lowered its PT to $140 from $170 and maintained its Equal Weight rating.</p>
<p>SHW&nbsp;– Wells Fargo lowered its PT to $275 from $315 and maintained its Equal Weight rating.</p>
<h2>DISCLOSURES</h2>
<div></div>
<p>Water Tower Research (“WTR”) is a professional publisher of investment research reports on public companies and, to a lesser extent, private firms (“the Companies”). WTR provides investor-focused content and digital distribution strategies designed to help companies communicate with investors.<br><br>WTR is not a registered investment adviser or a broker/dealer nor does WTR provide investment banking services. WTR operates as an exempt investment adviser under the so called “publishers’ exemption” from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940. WTR does not provide investment ratings / recommendations or price targets on the companies it reports on. Readers are advised that the research reports are published and provided solely for informational purposes and should not be construed as an offer to sell or the solicitation of an offer to buy securities or the rendering of investment advice. The information provided in this report should not be construed in any manner whatsoever as personalized advice. All users and readers of WTR’s reports are cautioned to consult their own independent financial, tax and legal advisors prior to purchasing or selling securities.<br><br>Dmitry Silversteyn, who is the writer of this report, covers the Chemicals &amp; Materials Technology and BioEconomy sectors for WTR. Mr. Silversteyn and members of his household have no personal or business-related relationship to the subject company other than providing digital content and any ancillary services WTR may offer.<br><br>Unless otherwise indicated, WTR intends to provide continuing coverage of the covered companies. WTR will notify its readers through website postings or other appropriate means if WTR determines to terminate coverage of any of the companies covered.<br><br>In certain instances, including this report, WTR will write research covering non-clients. Readers should assume that WTR may seek to turn these non-paying companies into paying clients. Likewise, WTR may seek to transform these non-clients into paying clients of it or of its affiliate, which provides services such as presenting at sponsored investor conferences, distributing press releases, advising on investor relations and broader corporate communications and public relations strategies as well as performing certain other related services (“Ancillary Services”). The companies that WTR covers in our research are not required to purchase or use Ancillary Services of WTR or an affiliate might offer to clients.<br><br>The manner of WTR’s potential research compensation and Ancillary Services to covered companies raise actual and perceived conflicts of interest. WTR is committed to manage those conflicts to protect its reputation and the objectivity of employees/analysts by adhering to strictly written compliance guidelines.<br><br>The views and analyses included in our research reports are based on current public information that we consider to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness, timeliness, or correctness. Neither we nor our analysts, directors, officers, employees, representatives, independent contractors or agents shall be liable for any omissions, errors or inaccuracies, regardless of cause, foreseeability or the lack of timeliness of, or any delay or interruptions in the transmission of our reports to content users. This lack of liability extends to direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, losses, lost income, lost profit or opportunity costs.<br><br>All investment information contained herein should be independently verified by the reader or user of this report. For additional information, all readers of this report are encouraged to visit WTR’s website www.watertowerresearch.com.</p>

KEY HIGHLIGHTS

WTR-CMI last week.&nbsp;In what was a down week for the market overall, our WTR-CMI index of 30 chemicals and materials technology stocks declined 1.8%, which still beat both the S&amp;P 500’s (2.8%) and Russell 2000’s (3.2%) returns for the week.
Winners and losers. Stronger than expected 1Q22 results drove AVNT (up 10.8%), and PPG (up 3.6%) last week, with AVNT also benefiting from the&nbsp;announced acquisition&nbsp;of DSM’s Protective Materials business, which would expand the company’s position in the advanced composites industry. At the other end of the spectrum, the ever-volatile lithium names came under pressure, possibly on news that Chinese lithium carbonate production exceeded expectations, with LTHM losing 10.7%, LAC pulling back 9.3%, and PLL and ALB seeing their stock prices decline 5.3% and 4.9% respectively.
Construction market losing steam in US.&nbsp;Construction and Transportation markets represent 40-50% of a typical chemicals and materials company’s sales, so the performance of these industries is a key barometer of performance for the companies in their respective supply chains. With the global automotive industry struggling with semiconductor shortages, COVID lockdowns, and logistical issues, the strength of the construction market helped shore up volumes for many companies in our sector in 2021. However, recent&nbsp;weakness in this market, driven by cost inflation and now, higher mortgage rates, may spell trouble for companies with exposure to the sector, including SHW, PPG, FUL and RPM. Furthermore, with&nbsp;homebuilders’ sentiment declining, construction market woes may be just beginning.
Organic production drives bio-based ag-chem growth.&nbsp;Organic fresh produce sales grew 4% Y/Y&nbsp;in 1Q22, and while growth was driven by higher prices, as volumes declined 1%, they still outperformed conventional produce sales, which saw volume drop of 2.7% Y/Y. Continued adoption of organic farming is one of many reasons bio-ag companies like MBII and BIOX are seeing strong growth, while&nbsp;established ag-chem companies jockey for position&nbsp;in this evolving industry. With fertilizer prices and availability becoming in issue (see below),&nbsp;biostimulants market segment&nbsp;may see even stronger adoption rates.

WTR-CMI WEEKLY PERFORMANCE

Source: YCharts, April 22 close
Automotive &amp; Transportation
Bad start to the year in Europe. 1Q22&nbsp;ACEA statistics&nbsp;on new auto registrations in Europe were released, showing a 20.5% Y/Y drop in March (ninth consecutive month of Y/Y declines), which brought 1Q22 registrations down 12.3% Y/Y. With 1Q22 containing only one month (March) of tough Y/Y comps and 2Q22 coming against the last two strong months of 2021, April and May, this quarter’s performance may not show much if any improvement compared to 1Q22 results. Companies with significant exposure to the European automotive market, such as AXTA and BASF (and to a lesser degree, PPG) may therefore continue to struggle with volumes, even as they raise prices in order to catch up with inflationary raw material costs. Results therefore appear more likely to disappoint, at least until we get into easier Y/Y comps in 2H22.
COVID lockdown impact yet to be worked out, while European war adds further concerns. While the Chinese government appears to be relaxing the lockdowns in Shanghai, the&nbsp;restart of production in the region&nbsp;is going far from smoothly. In the meantime, the lockdowns and shuttered production impacted the already tight semiconductor market, with&nbsp;Chinese chip output down 4.2%&nbsp;Y/Y, the first time Y/Y production slipped since 1Q19. With chip shortages continuing to be an issue holding back auto production globally,&nbsp;Honda joined the list of companies cutting back on auto builds&nbsp;at its factories in Japan, citing COVID lockdowns and chip shortages as the reason. And as if that wasn’t enough of a headwind for the industry,&nbsp;Continental, one of the major global tire producers, recently lowered its earnings outlook&nbsp;for the year, citing higher material costs due to the war in Ukraine, as well as related supply chain disruptions.
Lithium &amp; EV Ecosystem Developments
Supply chain tie-ups continue. Companies throughout the EV supply chain look to both secure critical metals and materials for batteries and electric motors powering the EV transition, and to reduce if not eliminate the near total dependence on China for these strategic materials. China, for example, supplies near 100% of rare earths, used in magnets driving electric motors. One global electric motor producer, Schaeffler,&nbsp;recently announced a deal&nbsp;to source rare earths for its magnets from Norway, reducing its dependence on China, at least after 2024. Graphite, another critical material for EV batteries, is also expected to see strong growth going forward, with auto companies seeking to secure their supply of the material with off-take agreements with producers. Recently, a US unit of Australian company Syrah Resources Ltd.&nbsp;announced the receipt of $107M in a conditional loan&nbsp;from the Biden Administration to expand its facility in Louisiana and provide a domestic source of graphite for Tesla’s operations.
Efforts to domesticate EV supply chain. Again, both in an effort to shorten and simplify the supply chain, but also to reduce reliance on China, manufacturers and governments are working to develop local ecosystems for EV production. Thus,&nbsp;South Korean battery companies are looking to develop and expand nickel production in Indonesia, signing an agreement with Indonesian state-owned companies for a project worth around $9 billion over time. Closer to home, the founder of Britishvolt and Italvolt has announced the creation of another subsidiary, this time in the US, named Statevolt, for the purpose of&nbsp;building a lithium battery factory in U.S., most likely in Southern California’s Imperial Valley, which will offer an annual capacity of 54 GWh when fully expanded.
Impact of chip shortages spreading to EVs. While the semiconductor shortage has plagued the auto industry for well over a year, the EV industry seemed largely immune. That may be changing, as EV production halts have begun to occur more often, usually blamed on chip shortages, but now also on supply disruptions related to the war in Ukraine.&nbsp;Renault had to pause production&nbsp;of its all-electric Mégane E-Tech Electric brand in France for over 10 days recently. With chip shortages expected to last into 2024, their impact on EV production may expand which, combined with higher material and battery costs (and resulting higher vehicle costs), may temper the pace of growth of EVs globally.
Ag-Chem and Ag-Tech
Real world implications from the war in Ukraine. As expected, Russia’s invasion of Ukraine is having a catastrophic impact on the country’s ag sector. Government officials already warned that this year’s plantings may be down as much as 50%, perhaps more, as the result of the conflict. The latest&nbsp;planting updates&nbsp;from the region do not provide cause for optimism. And despite the heroism of the farmers that are getting out into the fields despite shelling, land mines, and&nbsp;shortages of everything from fuel to fertilizers, this year’s production may barely suffice for internal use, with longer term impact likely to be felt for years to come. Aside from the planting and production shortfall in Ukraine, the impact of sanctions and counter sanctions continue to be evaluated from the global perspective. And while American farmers may be&nbsp;less impacted by potential shortages of fertilizers, given that our needs are met largely by domestic or Canadian production, in Brazil, which imports 75-95% of its fertilizer needs, much of it from Russia and Belarus, price and availability may become a real issue for the region’s ag industry.
Availability of ag inputs. Given the importance of Brazil in the global market as a producer and exporter of row crops, acreage or yield declines due to unavailability of crop inputs can have devastating effects on global food security. On a positive note, a&nbsp;recent report by Reuters&nbsp;mentioned that least 24 vessels carrying almost 678,000 MT of Russian fertilizers will reach Brazil in the following weeks. However, with 11 of the 24 vessels leaving port after the February 24 start of hostilities, the flow of fertilizer from Russia into the country may slow, even as demand ramps up, leaving plenty of uncertainty in the market as to the ultimate production quantities that would be available for export. Speaking of Brazil, the&nbsp;country’s wheat industry saw a strong uptick in herbicide use in 2021, driven in part by growth in planted acres, but also by growing adoption of pre-harvest desiccation. Wheat being an important end-market for BIOX’s sales and a growth opportunity for MBII as it partners with BIOX to expedite its penetration of the LATAM market, we see this is a positive for the combined company, as well as for ag-chem majors like CTVA, BASF and Bayer.
As if the war and cost inflation wasn’t enough. While one would expect the conflict in Europe to disrupt production and shipping of fertilizers, Union Pacific’s limitations on fertilizer shipments in domestic markets is adding insult to injury.&nbsp;CF Industries’ notice of UP reducing shipments&nbsp;of its nitrogen and hydrogen products by 20% may impact the company’s ability to meet new or incremental demand, adding to availability concerns many farmers already face, not to mention likely contributing to higher fertilizer prices if alternative shipping arrangements are required. The one remaining silver lining is the&nbsp;continuing upward trend in grain prices, which suggest US farmers may still deliver strong results, even with higher costs of everything from fertilizers to crop protection chemicals, to fuel, to labor, to land.
Rating and Price Target Changes
ALB&nbsp;– RBC raised its price target (PT) to $276 from $275 and reiterated its Outperform rating.
ASH&nbsp;– Wells Fargo raised its PT to $113 from $105 while maintaining its Equal Weight recommendation; Mizuho also raised its PT to $136 from $129, reiterating its Buy rating.
AVNT&nbsp;– Wells Fargo raised its PT to $65 from $60 and reiterated its Overweight rating; Oppenheimer also raised its PT to $69 from $68 and reiterated its Outperform rating.
AXTA&nbsp;– Deutsche Bank downgraded the stock to Hold from Buy and lowered PT to $27 from $34; Wells Fargo reduced its PT to $27 from $32 and maintained its Equal Weight rating.
CMP&nbsp;– BMO raised its PT to $63 from $60 and maintained its Market Perform rating.
CTVA&nbsp;– RBC raised its PT to $67 from $57 and reiterated its Outperform rating.
EAF&nbsp;– RBC lowered its PT to $112 from $113 but reiterated its Outperform rating.
EMN&nbsp;– BofA downgraded the stock to Neutral from Buy and lowered its PT to $124 from $150; Wolfe Research downgraded the stock to Peer Perform from Outperform and lowered its PT to $114 from $130.
FMC&nbsp;– RBC raised its PT to $152 from $135 and reiterated its Outperform rating.
PPG&nbsp;– Wells Fargo lowered its PT to $140 from $170 and maintained its Equal Weight rating.
SHW&nbsp;– Wells Fargo lowered its PT to $275 from $315 and maintained its Equal Weight rating.
DISCLOSURES

Water Tower Research (“WTR”) is a professional publisher of investment research reports on public companies and, to a lesser extent, private firms (“the Companies”). WTR provides investor-focused content and digital distribution strategies designed to help companies communicate with investors.  WTR is not a registered investment adviser or a broker/dealer nor does WTR provide investment banking services. WTR operates as an exempt investment adviser under the so called “publishers’ exemption” from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940. WTR does not provide investment ratings / recommendations or price targets on the companies it reports on. Readers are advised that the research reports are published and provided solely for informational purposes and should not be construed as an offer to sell or the solicitation of an offer to buy securities or the rendering of investment advice. The information provided in this report should not be construed in any manner whatsoever as personalized advice. All users and readers of WTR’s reports are cautioned to consult their own independent financial, tax and legal advisors prior to purchasing or selling securities.  Dmitry Silversteyn, who is the writer of this report, covers the Chemicals &amp; Materials Technology and BioEconomy sectors for WTR. Mr. Silversteyn and members of his household have no personal or business-related relationship to the subject company other than providing digital content and any ancillary services WTR may offer.  Unless otherwise indicated, WTR intends to provide continuing coverage of the covered companies. WTR will notify its readers through website postings or other appropriate means if WTR determines to terminate coverage of any of the companies covered.  In certain instances, including this report, WTR will write research covering non-clients. Readers should assume that WTR may seek to turn these non-paying companies into paying clients. Likewise, WTR may seek to transform these non-clients into paying clients of it or of its affiliate, which provides services such as presenting at sponsored investor conferences, distributing press releases, advising on investor relations and broader corporate communications and public relations strategies as well as performing certain other related services (“Ancillary Services”). The companies that WTR covers in our research are not required to purchase or use Ancillary Services of WTR or an affiliate might offer to clients.  The manner of WTR’s potential research compensation and Ancillary Services to covered companies raise actual and perceived conflicts of interest. WTR is committed to manage those conflicts to protect its reputation and the objectivity of employees/analysts by adhering to strictly written compliance guidelines.  The views and analyses included in our research reports are based on current public information that we consider to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness, timeliness, or correctness. Neither we nor our analysts, directors, officers, employees, representatives, independent contractors or agents shall be liable for any omissions, errors or inaccuracies, regardless of cause, foreseeability or the lack of timeliness of, or any delay or interruptions in the transmission of our reports to content users. This lack of liability extends to direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, losses, lost income, lost profit or opportunity costs.  All investment information contained herein should be independently verified by the reader or user of this report. For additional information, all readers of this report are encouraged to visit WTR’s website www.watertowerresearch.com.

Mat-Chem Notes for the Week Ended April 24, 2022

United States

GrafTech International Ltd. manufactures and provides natural and synthetic graphite and carbon based products and services. The Company offers graphite electrodes, petroleum needle coke, crystalline form of carbon, and energy solutions for manufacture of steel, aluminum, silicon metal, automotive products, and electronics. GrafTech International serves customers worldwide.

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GrafTech International Ltd (EAF US)

Mat-Chem Notes for the Week Ended April 24, 2022

KEY HIGHLIGHTS WTR-CMI last week. In what was a down week for the market overall, our WTR-CMI index of 30 chemicals and materials technology...

Water Tower Research

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